Latest BTC market dip is relatively small, but sentiment is in freefall

Crypto investor sentiment is in freefall during the latest market dip as market analysts and traders search for a singular reason for falling asset prices and Bitcoin’s descent below $100,000.

The crypto “Fear and Greed” index, a metric tracking investor sentiment, is at 22, signaling investor caution and hovering just above “extreme fear” territory — its lowest level since March, according to CoinMarketCap

“This dip has been the smallest of this cycle, 25% vs 31% and 32%, but it feels so, so much worse. Sentiment cooked,” market analyst Nic Puckrin wrote.

Over 70% of Polymarket traders now expect Bitcoin to dip below $90,000, a trend that market analysts have attributed to older Bitcoin whales cashing out. Long-term Bitcoin holders dumped over 400,000 BTC on the market in October.

Market analysts, investors and traders are debating whether the latest dip signals the start of the next prolonged crypto bear market or if cryptocurrencies will form new all-time highs in 2026 if interest rates continue to drop and liquidity flows into assets.

Related: Sour crypto mood could fuel an unexpected rally this month: Santiment

Crypto market investors search for a singular cause for BTC crashing below critical support

Bitcoin dipped below its 365-day moving average, a critical support level, several times in November and continued to move lower on Friday, trading well below its 365-day average.

Senior Bloomberg exchange-traded fund (ETF) analyst Eric Balchunas rebuffed the idea that heavy outflows from BTC ETFs were the primary cause of the continued price decline and said that ETF investors held strong, despite a 20% price shock.

ETFs saw about $1 billion in outflows over the last month, despite October’s historic market crash, which saw about $19 billion in leveraged bets wiped away from the market within 24 hours — the worst crypto liquidation event in history, Balchunas said.

Alex Thorn, head of firmwide research at investment firm Galaxy, lowered his 2025 BTC price forecast from $180,000 to $120,000 due to several factors, including investor rotation into competing narratives like gold and AI.

Thorn also said that leveraged liquidations in crypto derivatives markets are also one of the main culprits behind falling asset prices.

Cathie Wood, the founder of investment firm ARK Invest, said that stablecoins are eroding Bitcoin’s market share as they become the store of value for residents in emerging economies.

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